In the recent case of Avocet Industrial Estates LLP v Merol Ltd [2011] the High Court found that a tenant had not complied with the terms of a break clause and therefore was liable to remain as tenant until the end of the term.
The commercial lease contained the usual provision that the break clause would not be valid unless all the conditions of the break clause had been met. There was the usual provision that all payments due under the lease had to be paid up to date.
In this particular case the tenant owed default interest to the landlord on late payments under the lease although the landlord had never demanded these sums.
The High Court found that the condition that all sums had been paid had not been met. The Judge stated that this was a harsh result for the tenant and that conditions such as these were "something of a trap for the tenant".
This case is a stark reminder that when acting for tenant it is important to negotiate the terms of any break clause at the outset to avoid these harsh results and to ensure that any break clause is exercised under professional advice.
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